IBBI invites public comments on Draft regulations for Fast Track Resolution process for Eligible Corporate Persons
The Ministry of Corporate Affairs had set up four Working Groups to facilitate implementation of the Insolvency and Bankruptcy Code, 2016. The Working Group 3 had a mandate to deliberate and submit its recommendations on rules and regulations and other related matters for the insolvency and liquidation process under the Insolvency and Bankruptcy Code, 2016. This Working Group has submitted draft regulations for Fast Track Insolvency Resolution of Corporate Persons. A draft notification under Section 55(2) of IBC, 2016 for eligible corporate debtors has also been prepared. Comments on each provision of the draft regulations and draft notification are invited by 8th May, 2017. You may submit your comments online in the feedback form given at http://ibbi.gov.in/register/contactform or by email at [email protected]
Insolvency and Bankruptcy Board of India NOTIFICATION
New Delhi, the [.], 2017
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (FAST TRACK INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2017
IBBI/ [ ].- In exercise of the powers conferred under sections 5,7,7,14,15,17,18,21,24,25,29,30,55,196 and 208 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following Regulations, namely.
CHAPTER I
PRELIMINARY
1. Short title and commencement
i. These Regulations may be called the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017.
ii. These Regulations shall come into force on []
iii. These Regulations shall apply to the fast track corporate insolvency resolution process.
2. Definitions.
i. In these Regulations, unless the context otherwise requires-
“fast track corporate insolvency resolution process” means the insolvency resolution process for corporate persons under Chapter IV of Part II of the Code.
ii. Unless the context otherwise requires, words and expressions used and not defined in these Regulations, but defined in the Code, shall have the meanings assigned to them in the Code.
3. Eligible corporate debtors.
These Regulations shall apply to such corporate debtors or categories of corporate persons, as the case may be, as are notified by the Central Government under section 55(2).
4. Conduct of fast track corporate insolvency resolution process
The provisions of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall, mutatis mutandis, apply to the conduct of a fast track corporate insolvency resolution process;
Provided that the in conducting a fast track corporate insolvency resolution process under these regulations:
a. The words “corporate insolvency resolution process” in the Insolvency and Bankruptcy Board of India (insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall be substituted by “fast track corporate insolvency resolution process”:
b. The following explanation shall be added to Regulation 5 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 –
“Explanation – For the purpose of this Regulation, it is clarified that any debt extended by any person providing financial services which is in compliance with any law for the time being in force in relation to such debt shall in no event be considered as an extortionate credit transaction.”; and
c. The words “section 12” in sub-regulation (1) of regulation 36 and sub-regulation (1) of regulation 401 respectively of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall be substituted with “section 56”.
Draft notification for eligible corporate debtors under Section 55 (2) of IBC, 2016
The provisions of Fast Track Corporate Insolvency Resolution Process shall be applicable on the following class of Corporate persons: –
I. Small company – As defined under subsection (85) of section 2 of the Companies Act, 2013.
II. The Company/LLP which has borrowed money not exceeding Rs.2 Crores in any manner.
III. Start-ups in DIPP notification no 180 (E) dated 17.02.2016
Definitions as referred above:
i. Small company: As per subsection 85 of Section 2 of companies Act, 2013, a small company means a company, other than a public company:-
a) Paid up capital of which does not exceed fifty lac rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or
b) Turnover of which as per its last profit and loss account does not exceed two crores rupees or such higher amount as may be prescribed which shall not be more than twenty crores rupees.
Provided that nothing in this clause shall apply to:-
a) A holding company or a subsidiary company
b) A company registered under section 8; or
c) A company or body corporate governed by any special Act.
i. Start-ups: As per DIPP notification no. 180 (E) dated 17.02.2016, an entity shall be considered as a ‘startup’-
a) Up to five years from the date of its incorporation/registration.
b) If its turnover for any of the financial years has not exceed Rupees 25 crore, and c) It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property;
Provided that any such entity formed by splitting up or reconstructing of a business already in existence shall not be considered a ‘startup’;
